Is Amazon stock a good long

For years, Amazon seemed invincible, an e-commerce giant that made other companies shiver when it muscled into their markets. It helped Amazon stock soar into four-digit territory, and the company's earnings reports often delighted investors.

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But is Amazon stock still considered a buy?

The company proved vulnerable in April after it uncharacteristically fell far short of Wall Street's forecast when it reported an unexpected first-quarter loss. Amazon stock plunged 14% in reaction, its largest one-day drop since July 2006.

Investors wondered whether the disastrous earnings report was an isolated fluke or a sign of things to come. Some on Wall Street contended the e-commerce titan just needs a few tweaks. But others say it's time for hard-charging Amazon to pause and rethink its strategy.

Amazon Stock Plunges On Earnings Report

Amazon stock plunged in late October after reporting third-quarter results that beat on earnings. But it gave an outlook that fell short. Revenue climbed 15% from the year-ago period to $127.1 billion.

That marked a return to double-digit gains after three straight quarters of growth in the single digits. But for its fourth quarter, Amazon said it expects revenue in the range of $140 billion to $148 billion. The midpoint of $144 billion is below estimates of $155.1 billion.

Amazon shares will wrap up 2022 as their worst year since 2000, the year of the dot-com crash. The stock has collapsed about 65% in 2022, compared with its 80% plunge 22 years ago.

In late November, Amazon began making what are expected to be the largest corporate staff cuts in its 28-year history, axing as many as 10,000 corporate employees. That's about 3% of its workforce. The cuts will focus on Amazon's devices organization, including the voice assistant Alexa, as well as its retail division and human resources.

In a blog post Amazon said, "We continue to face an unusual and uncertain macroeconomic environment."

Industry Players Report Layoffs

The layoffs fit a pattern. Numerous companies are reporting layoffs. Tesla (TSLA) Chief Executive Elon Musk slashed the Twitter workforce in half, after he finished buying the company for $44 billion.

Other technology companies that have cut staff include Facebook-parent Meta (META), Snapchat-parent Snap (SNAP) and Salesforce (CRM).

Looking ahead, Amazon has several irons in the fire. In late December, the company began delivering orders by drones in California and Texas, in two small towns as part of a service it calls Prime Air.

The maximum payload for Prime Air is five pounds. Amazon says that 85% percent of its shipments fall under that weight. The goal is to ultimately fly out packages to customers' homes within an hour.

"The promise of drone delivery has often felt like science fiction," Amazon said in a press release. "We've been working for almost a decade to make it a reality."

Move Into The Medical Business

Meanwhile, Amazon's acquisition of One Medical for $3.9 billion in cash is its largest push yet into the health care business, which began with its acquisition of PillPack more than four years ago for a reported $1 billion. That gave Amazon the ability to ship prescription drugs around the country.

Amazon stock will face stiff competition in this market as Walmart (WMT), CVS Health (CVS) and other large corporations are placing big bets on expanding revenue through health care services.

In November, Amazon announced Amazon Clinic, which provides virtual care to patients in 32 states. In conjunction with Amazon Pharmacy and One Medical, the clinic will offer a message-based service to those seeking treatment for more than 20 everyday medical issues.

Further, the move solidifies Amazon's intention to be a major player in the consumer-driven health care space, building out services and capabilities around their other offerings like Amazon Pharmacy.

Technical Analysis Of Amazon Stock

In the stock market, timing is critical. So when you're looking for stocks to buy or sell, it's important to do the fundamental and technical analysis that identifies lower-risk entry points that also offer solid potential rewards.

The IBD Stock Checkup tool shows that Amazon stock has a weak IBD Composite Rating of 40 out of 99. When choosing growth stocks for the biggest potential gains based on the CAN SLIM investment paradigm, try to focus on those with a Composite Rating of 90 or higher.

Amazon's Relative Strength Rating now stands at 14 out of 99. Ideally, look for stocks with a rating of 80 or higher.

Amazon stock is not a buy at this time.

If you're new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.

Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.

If you're interested in buying large-cap stocks, in these articles you'll find technical analysis of leading large caps to see if they are in or near a proper buy zone.

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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